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October 20, 2003

Busting Family Budgets for America

To Doctor Dean, 7.5% of your income might not sound like a lot of money:

Dean also focused on his universal health care plan, which would expand current government programs to offer health care to all those who do not have it now. Children and young adults under 25 years of age would be covered, he said, as would families making less than 185 percent of the poverty level. Those over 25 years old and who made more than that cutoff could buy federal health insurance for 7.5 percent of their adjusted gross income, Dean said. The cost would be about $87 billion per year, he said.

But let's consider some examples. First, medical expenses only become tax deductible if they exceed 7.5% of your income. I don't know how many people currently get any benefit from that deduction, but it bet it's not many. Now Dean expects everybody who earns over $16,613 a year to start paying that much for their health care! 7.5% of their gross adjusted income? I just did the calculation for myself, and it would be over $300 a month more than I pay now. That's right. Three hundred. A month. Extra. Do the calculation yourself. Would you be able to pay 7.5% of your income for health insurance? Or would you simply opt out of Dean's plan? Now, normally, when you hear about a universal government health plan, you might expect the government to pay most of the cost, right? Employers normally pay 75% or more of their employees insurance costs. But in Dean's case, the median family picks up as much of the cost as the government provider!

Here are some ball park numbers:

...during the year beginning in the spring of 2001, the cost of employer-sponsored health insurance increased by 12.7%, to $3,060 for single coverage and $7,954 for a family plan, according to a study by the Kaiser Family Foundation. The rate of increase was more than twice that of general medical inflation during the same period. The annual premiums calculated by Kaiser are national averages that take into account all types of coverage and all sizes of employers without regard to where they're located.

Okay, so for those earning over $16,613 a year Dean offers you insurance - for 7.5% of your gross adjusted income. I'm assuming that means after the standard $7,000 deduction, so for those earning $30,000, 0.075 x $23,000 = $1,725 a year or $143 per month. Higher than most would probably pay for insurance through their employer now. If they can't afford their employers insurance, they aren't going to afford this. What about the median family? Those in the middle at the 50th percentile?

According to the Census Bureau, the median family income for a family of four is about $63,000. Where does that average family get under Dean's plan? Nothing. Let's round their standard deduction up from $9,300 to $10,000. That leave a gross adjusted income of around $53,000. Now, 0.075 x 53,000 = $3,975. This is exactly half the $7,954 cost of just going out and buying insurance on their own. An individual earning the same amount per year would actually pay 30% more than if they went out and bought coverage themselves without an government involvement. What type of a plan is that?

Most employers pay 75% or more of their employees insurance cost. Under Dean's plan, the government would pay less than half for this average family. Would they be able to afford over three hundred dollars a month for his plan? Not if they can not afford their own insurance already. Dean has to know this. He has to know his plan does not make any sense for those at or above the median family income level. Sure it might make sense for those below that level, but he continues to advertise it as universal coverage for just $87 billion a year. Bull shit. It's not universal and he knows it.

Posted by Mike at October 20, 2003 02:42 PM

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Posted by: Paul Bates at January 13, 2004 11:45 AM

Posted by: Paul Bates at January 13, 2004 11:45 AM

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